Gold a Traders Road Map.

Lets Start at the Beginning

I got the data for this chart from only gold.com, it tells us a few things:-1. Gold has been in a consant bullmarket since 17922. It has occasional spikes higher followed by periods of flat consolidation3. These consolidations can last for decades.​4. We have just had a spike higher and are correcting

(Click the images to enlarge them)

Gold underperforms riskier assets over time, it always has value unlike a bankrupt company, and people get paid to take risk. It is not clear exactly what drives gold prices but it is some function of:- Safe Haven demand, Jewelry demand, Bullion demand, supply, sentiment, technicals and taste. As a result, it is near impossible to trade this asset from a fundamental view point unless of course you use the above chart and plan to buy real gold and hold for ever.

The Long Term Traders View

This Chart shows the path of gold throughout the recent spike higher, effectively a 40 year bull run that separated into three sections, a run up from 1972-1980, a flat consolidation to the year 2000 another run up until 2012 and then a second flat consolidation. This chart suggests that we might be in for as much as 20 years of flat correction and if it moves in a similar manner to the previous correction we could expect the price to fall more than 50% giving a rough consolidation target of just under $950 by the year 2030.

A drop to $1000 or below would cause consternation in the market place but it is not unrealistic and with rising interest rates combined with a soaring dollar it is not that hard to imagine the demand for good old safe, not interest paying gold to wane.

Trading Gold what are the possibilities?

This daily chart begins to bring alive the possibilities, I have labeled the fall from the 2011 peak as a 5 wave (there are many other possibilities) that terminated at $1050, this would be the first part of the correction and as I established earlier this correction should continue for many years. The second part of the correction should easily reach into the blue box made from the fib retracement of the decline in what I have labeled wave A of the correction. Gold is still technically in a downtrend as the purple trend line drawn from the 2011 peak remains intact and acted as resistance earlier this week for the 6th time so it is important. That trendline should eventually break as the correction continues. This pattern does call for an eventual re test of the $1050 low but not until after the current wave has reached into or above the blue box.

Actionable Trades ?

This final chart is the 4 Hour for gold, If we are correct and Gold is currently correcting higher then the green trend line could will hold, the blue box represents the fib retracements of the most recent rise and shows that the trend line comes in where we might expect a turn. If the pair does turn at this point we could expect a rise in the region of $80 before any signicficant retracemet which would take it just above the purple trendline we identified on the daily chart.

In Conclusion

1. Gold may be in a long term correction2. The next phase of that correction should take it higher3. A potential turning point has been identified on the 4 hour chart4. A likely target for this turn is $80, or above the trend line on the Daily chart

Disclaimer: These are just my ideas, I am neither qualified or regulated to give investment advice, please do your own due diligence.

RetiredearlyFX is a trading name of the investment company Bagehotsway.We are not a regulated company but we only sell regulated products.We are not authorised to give investment advice.We believe all figures quoted to be accurate but past performance in no way guarantees future performanceTrading FX is high risk and not suitable for everyone.